Not every customer affects your bottom line to the same degree. Here’s how to find your most important customers.
There’s a misconception in business that every customer is a good customer. Experienced marketers, however, know that not every customer is worth the same. Some buyers will spend very little and soak up vast amounts of support and attention from your team. Others will spend significantly with your business while rarely demanding extra work and services. Your goal isn’t necessarily to find the customers who cause your business the least hassle, but it’s important to look at the different costs customers bring and how to balance them out. Here’s a closer look at how to find your most valuable customers.
How much do they spend? Your most valuable customers will be determined, in part, by how much they spend with your business. Whether they frequently purchase small numbers of products or services or make annual large buys, those dollars add up. One way to evaluate a customer’s value to your business is to ask how much he or she adds to the bottom line. Look at historical, current, and predicted future spending to put this revenue into more context.
How much support do they need? The services your business provides cost money. In some cases, these are quantifiable—customer service time, additional training, or technical support. In others, it’s more indirect support, such as sales or marketing. Consider both, but especially pay attention to the costs that are directly attributable to the customer.
What’s the profit margin? When you consider the support customers need versus how much revenue they generate, you gain a sense of their profit margin. Two customers may spend the same amount of money with your business each year; one generates significant profits, while the other requires so much support that he or she erodes your margins. Understanding this calculation can help you identify who is adding to your profits and who looks good on paper but doesn’t translate to a strong profit margin.
Do they send you referrals? Tough customers often know they’re difficult to deal with, and they value vendors that get it right. As a result, they may recommend you to friends, mention you at industry events, and leave you great reviews online. Referrals and positive word of mouth are valuable in the amount of business you earn, as well as the boost in visibility and building a positive reputation.
Do they lend you prestige? In certain cases, working with specific brands lends credence to your own work. In digital marketing, an affiliation with a company such as Google suggests that you’re among the best. Don’t overlook this type of value; however, a customer who completely drains your financials probably won’t make up for it in associative benefits alone.
Find your most valuable customers. Target your marketing to attract more of them, and align your customer service organization to provide them with the best service possible. You’ll grow your business and keep your most important relationships on track over the long term.